OPINION BY STEFAN D. CASSELLA
(Former Federal Prosecutor, Asset Forfeiture and Money Laundering Section Department of Justice, United States)
July 30, 2020
Dr. Patricia Nacimiento, Partner
Herbert Smith Freehills LLP
This Opinion is authored by Stefan D. Cassella on behalf of Stream House AG at the request of Herbert Smith Freehills LLP. It is based on the Expert Report of PricewaterhouseCoopers dated July 29, 2020 (the "PwC Report"), bank records provided by Rietumu Bank in Latvia, and facts disclosed in the litigation between the Republic of Kazakhstan ("Kazakhstan") and Anatolie Stati, Gabriel Stati, Ascom Group S.A. and Terra Raf Trans Trading Ltd. (the "Stati Parties"). The author has no personal knowledge of those facts but, for purposes of this Opinion, assumes those facts to be true and to be supported by the documents cited in the PwC Report and the record in the referenced litigation.
This Opinion summarizes a few of the fraud schemes perpetrated by the Stati Parties in violation of U.S. and Kazakh law, and discusses how they would constitute predicate offenses for money laundering violations that occurred in both the United States and Latvia when financial transactions in furtherance of the fraud schemes occurred in those countries. It also discusses the fraud upon the arbitral tribunal (the "Tribunal") that occurred when the Stati Parties initiated arbitral proceedings under the Energy Charter Treaty (the "ECT Arbitration"), and the possibility that collecting the arbitral award granted to the Stati Parties in that proceeding (the "ECT Award") would itself constitute a money laundering offense in any country where a financial transaction involving the proceeds of the ECT Award occurs.
While we reserve the right to amend, alter and update this Opinion should further documentation or other evidence become available, it is apparent from our analysis that the Stati Parties engaged in extensive international money laundering activity involving the proceeds of crimes committed in the United States and Kazakhstan, and that the Tribunal in the ECT Arbitration was not informed of the scope of this criminal activity prior to the issuance of the ECT Award on 19 December 2013.